'Tis the Season to Buy Retail Stocks

 | Nov 22, 2011 | 10:30 AM EST  | Comments
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Stock quotes in this article:

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With Black Friday nearly here, all thoughts turn to shopping. Nothing quite compares to this time of year when the world of retail rises up and grabs our attention. Even non-shopaholics find themselves spending more time in stores and buying more stuff than they intended. It is hard to avoid even a modest shop-till-you-drop moment or two during the holidays.

Over the past several months, I have written about the retail industry several times. That's because retailers have been earning high grades from my guru strategies, which are computerized models that I created that mirror the investment protocols used by some of Wall Street's savviest investors. Before most observers started to view retail in a positive light, these strategies were finding retailers whose stocks were worth buying, and still are.

Early indications are that retailers will have a solid selling season this year -- probably not a time-to-remember type of season, but a pretty darn good one, especially considering the general economy's lackluster performance. And prospects for retailers remain solid going into the new year, which is why this Black Friday should be a time not only to consider buying stocking stuffers, but stocks.

A number of discount retailers earn high grades from my guru strategies on Validea.com. This is not surprising since consumers are looking for good deals. These discounters include:

The TJX Cos. (TJX) is the nation's largest off-price retailer of brand-name apparel and home fashions, with nameplates including T.J. Maxx, Marshalls, HomeGoods and HomeSense. It operates about 3,000 stores, mainly in the U.S., but also in Canada, the U.K., Ireland, Germany and Poland.

Ross Stores (ROST) is the second-largest off-price retailer of brand-name apparel and home accessories after TJX. It operates more than 1,000 stores, most under the Ross Dress name.

Wal-Mart (WMT) is the world's largest retailer, with over 9,800 stores and operations in 28 countries.

Dollar Tree (DLTR) is the country's largest single-price-point retailer. It has more than 4,300 stores in 48 states and five Canadian provinces.

Apparel stores are also looking like good investments. The guru strategies' favorites in this segment of the retail market include:

Aeropostale (ARO) is a mall-based teen retailer with about 1,000 stores.

The Buckle (BKE) aims at men and women, selling medium and high-priced casual clothing at its 400-plus stores.

Lululemon Athletica (LULU) is a specialty retailer known for higher-end, yoga-inspired lines of women's athletic apparel, though it also sells men's apparel. It has more than 100 stores.

DSW Inc. (DSW) sells high-end footwear at somewhat discount prices. Its stores number 327.

Jos. A. Bank Clothiers (JOSB) aims exclusively at men. This 106-year-old retailer sells business and casual clothing via more than 500 stores, plus mail order.

Urban Outfitters (URBN) operates a variety of stores, totaling 400 outlets, including Urban Outfitters, Anthropologie, Free People and Terrain. It also has a wholesale business.

Foot Locker (FL) is a major retailer of athletic footwear and apparel. With more than 3,400 stores in 21 countries, its stores operate under the Foot Locker, Lady Foot Locker, Kids Foot Locker, Champs Sports and other names.

Coach (COH) is a manufacturer, distributor and retailer of such leather goods as handbags and belts. It has nearly 500 stores.

Finally, here is a conventional department store to consider:

Dillard's (DDS) has 294 department stores and 14 clearance centers, all under the Dillard's name.

All of these retailers get high passing marks from at least one of my guru strategies. If you plan on shopping during the next few weeks, consider putting some of these stocks in your shopping bag.

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